Barclays Picks One of Its Own as Chief

8:27 p.m. | Updated
Barclays, which has been tarnished by scandal, appointed a new chief executive on Thursday, as the British bank looks to restore its reputation and overhaul its culture.

By selecting Antony Jenkins, Barclays seemed to steal a line from the comedy series “Monty Python”: “And now for something completely different.”

Mr. Jenkins, 51, an Oxford-educated Briton with a soft-spoken demeanor, started his career 30 years ago as a cashier at a local Barclays branch. Over the last three years, he has overseen the sleepy consumer banking business at Barclays.

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In short, he has little in common with his predecessor, Robert E. Diamond. Mr. Diamond, an American-born investment banker, brought a hard-charging ethos to the bank, transforming it into a top player on Wall Street. But the culture of risk-taking also proved problematic. In July, Mr. Diamond resigned amid revelations that Barclays manipulated key interest rates for its own benefit.

“They’re complete opposites,” said Frederick Rizzo, a European bank analyst at T. Rowe Price, a big mutual fund manager that owns shares of Barclays. “Before you had an aggressive American investment banker and now Jenkins is a low-profile retail banker.”

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Even as concerns emerged about the bank’s ability to make money under a potentially more reserved approach, regulators and analysts viewed the appointment as a safe bet during a tumultuous time. The selection signals a return to the British banking roots of Barclays, as it aims to bolster its credibility. In addition to the rate-rigging inquiry, the bank also faces questions about its capital-raising efforts during the 2008 financial crisis.

Mr. Jenkins made the legal woes — and broader concerns about the bank’s culture — a central focus on his first day as C.E.O. Appearing at a town hall at Barclays’ London headquarters that was broadcast to thousands of employees across the world, Mr. Jenkins, in suit and tie but no jacket, emphasized the need to repair a tarnished reputation.

“The key point is to rally the organization of Barclays,” he said in an interview on Thursday. “We’ve obviously been through a very difficult time, but we need now to move on from that and focus on the future.”

Early on, Mr. Jenkins emerged as a favorite for the job. As the search process gained steam this month, he met with the bank’s board. The board also pursued William T. Winters, a former senior investment banking executive at JPMorgan Chase.

Marcus Agius, the board’s chairman, said on Thursday that Mr. Jenkins “stood out among a very competitive field of internal and external candidates because of his excellent track record transforming” the retail and business banking unit. Mr. Agius, who is stepping down in November, will be succeeded by an outsider, David Walker.

In picking Mr. Jenkins, the board was drawn to his knowledge of the bank’s inner workings.

The first member of his family to attend university, Mr. Jenkins started at Barclays in 1983 as a trainee. He left six years later for Citigroup, but rejoined Barclays in 2006 to lead its credit card business, Barclaycard. In November 2009, he was named chief of the retail and business banking group, and joined the executive committee.

Mr. Jenkins learned of his latest promotion days ago while he was on vacation in his London home. The bank held off announcing its choice until it was approved by the Financial Services Authority.

Two months ago, regulators urged the board behind the scenes to replace Mr. Diamond. During his tenure, Mr. Diamond came to personify the riskier pursuits of investment banking and the eye-popping pay packages on Wall Street.

The bank on Thursday said Mr. Jenkins could earn up to £8.6 million, or $13.6 million. By contrast, Mr. Diamond last year received £17 million, or $26.9 million, in pay and perks, which prompted heckling at the annual shareholder meeting in April.

Some shareholders, as well as British regulators and politicians, have blamed the culture of risk-taking under Mr. Diamond for the bank’s ethical lapses.

In June, Barclays agreed to pay $450 million to settle accusations by American and British authorities that it tried to manipulate the London interbank offered rate, or Libor, a key benchmark. Regulators accused the bank of reporting false rates to bolster profits and make its financial position appear healthier, the first case stemming from a multiyear investigation into more than a dozen global banks. Just days after the settlement, Mr. Diamond resigned.

Mr. Jenkins will have to clean up the mess left behind.

The Justice Department is still investigating Barclays traders as part of the broader Libor case and could bring criminal charges. The bank is also facing private litigation over rate manipulation.

Other government inquiries focus on the bank’s capital-raising efforts during the depths of the financial crisis. On Wednesday, Barclays disclosed that the Serious Fraud Office, the British government agency that investigates and prosecutes white-collar crime cases, “has commenced an investigation into payments under certain commercial agreements between Barclays and Qatar Holding.” Last month, the bank also confirmed that the Financial Services Authority was investigating Barclays over a related matter.

Unlike its peers, the Royal Bank of Scotland Group and the Lloyds Banking Group, Barclays managed to avoid a government bailout in the dark days of 2008, turning instead to sovereign wealth funds in Abu Dhabi and Qatar for an infusion of capital. Barclays raised a total of $7.1 billion from Qatar in July and October 2008. Qatar Holding is currently the largest shareholder in Barclays, with a 6.65 percent stake, according to Bloomberg data.

As the bank confronts the various investigations, analysts generally hailed the selection of Mr. Jenkins, with Citigroup analysts calling it “a safe appointment.”

“It’s very important that they brought in someone who was a safe hand,” said Shailesh Raikundlia, an analyst at Espírito Santo Investment Bank. He noted, however, that some investors “wanted a clean slate” — meaning an outside candidate.

The main test for Mr. Jenkins, analysts say, will be to bolster the bank’s credibility and address its myriad legal liabilities. In an interview, Mr. Jenkins acknowledged that the challenge was steep but “doable.” “There are many elements of Barclays’ culture that are strong and good, but clearly there are elements that have to change,” he said.

Despite the scandals, the bank’s financial footing looks better than many rivals. Barclays emerged from the crisis relatively unscathed, picking up pieces of Lehman Brothers. In the first half of the year, net profit rose 9 percent, to $4.86 billion, from $4.43 billion in the period a year earlier, excluding an accounting charge and other one-time costs.

Some investors worry that the selection of Mr. Jenkins, who lacks experience in the investment banking business, will crimp profits. The investment bank, which includes parts of the old Lehman empire, dominates the company’s operations. The unit generated 32 percent of Barclays’ revenue last year, while producing half the bank’s profits before taxes.

While questions remain about its future under Mr. Jenkins, the new chief assured his staff on Thursday that his appointment “does not signal any change in strategy or lack of commitment to the investment bank.”

Instead, he is focused on fixing the bank’s reputation. “We have a tremendous opportunity to change Barclays in a way that will better serve all of our stakeholders — customers, clients, colleagues, shareholders and broader society,” he said in a letter to employees. “Barclays can, and will, be a better bank.”